The blockbuster tech deal that every Wall Street adviser clamored to be a part of has proven not to have been all that lucrative for at least one advisory firm that worked on it.
That firm, Innisfree M&A Incorporated, sued Twitter on Friday in New York State Supreme Court, seeking around $1.9 million in what it says are unpaid invoices after it advised the company on its sale to Elon Musk. last year. Twitter hired Innisfree last May to help it communicate with its shareholders about the $44 billion deal. When Musk completed the acquisition of Twitter in October, the bill became his.
“As of December 23, 2022, Twitter remains in default of its obligations to Innisfree under the settlement in an amount of not less than $1,902,788.03,” the lawsuit says.
Twitter and an attorney for Innisfree did not immediately respond to requests for comment.
The Innisfree lawsuit is the latest sign that Twitter has stopped paying some of its vendors, advisers and other service providers since Musk took over the company. Twitter took on a large amount of debt for the deal, which it must pay off along with interest payments, even as it has also had to deal with declining sales. So to make the company’s finances work, Musk has cut costs.
Last month, the company that owns Twitter’s San Francisco headquarters accused Twitter of refusing to pay more than $3 million in rent payments. Twitter is also facing legal proceedings in London for not paying rent.
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A private jet company sued Twitter last year, alleging it had failed to pay $197,725 for flights taken by a former executive during the deal closing.
Musk has also avoided making payments to some of the former Twitter executives, who were set to receive multimillion-dollar payments when he fired them. And the severance offered to fired employees fell short of what was promised by Twitter’s previous management team, prompting many of those former employees to file lawsuits.
Companies like Innisfree play a crucial role, but behind the scenes, in mergers and acquisitions, often acting as go-betweens between shareholders and executives. Innisfree helped advise Twitter executives and sent a series of communications to shareholders about a vote. last september by approving the sale to Mr. Musk.
In its lawsuit, Innisfree says it first sent an invoice to Twitter around September 26. Around October 28, Twitter said that the invoice had been “successfully processed.” When Innisfree didn’t receive payment, she followed up twice in December, the complaint says. The advisory firm, through her lawyer, sent a letter to Twitter on December 23 demanding payment, but has not heard back from the firm.
Other Wall Street firms may not have benefited from Musk’s Twitter deal, which was the largest leveraged buyout for a technology company, either. Investment banks Morgan Stanley, Bank of America and Barclays collectively lent about $13 billion to finance the Musk acquisition. But they committed those funds ahead of inflation, rising interest rates and an attempt by Musk to break the deal. Since then, they have not been able to sell that debt, which is on their balance sheets.
Investment banks make money from the fees they charge to arrange these deals, preferring to sell any debt they end up with in case the borrowers can’t pay. Morgan Stanley wrote last month $356 million on its leveraged loans, meaning the market value of that debt has fallen since the deals were funded.
